On December 20, 2018, the New York State Department of Law (“DOL”) published a memorandum (“Memo”) setting forth guidelines to sponsors who wish to submit a condominium offering plan (“Plan”) and withhold certain units from the initial offer. The following summarizes the pertinent items from the DOL Memo, all of which will need to be clearly disclosed throughout the Plan, prior to withholding any units:
★ Applies to newly constructed, vacant or non-residential condominiums only. Other submissions (e.g. occupied conversions) will require prior written approval from DOL.
★ DOL will not permit sponsors to reserve the right in the Plan to withhold units from the offer in the future (thereby effectively removing previously offered units from the market).
★ Sponsors shall not withhold units to deceive the public about the number of sales. Therefore:
(1) For marketing/advertising, % of units sold must utilize total number of anticipated units in the condominium.
(2) Sponsors must not offer any withheld units (e.g. by engaging in sales/marketing activity, executing purchase agreements, or transferring title to units) prior to amending the Plan. VIOLATION MAY TRIGGER DOL INVESTIGATION FOR VIOLATION OF THE MARTIN ACT.
★ Declaring the Plan effective must be based upon the total number of anticipated units in the condominium.
★ Prior to declaring the Plan effective, sponsor must at all times offer at least 15% of the total anticipated units in the condominium.
★ Sponsor must not rent any units (including withheld units) before the consummation of the Plan.
★ Offering of previously withheld units may be done via a price change amendment provided the only information not previously not disclosed in the Plan is the offering price. If more information needs to be disclosed, a substantive amendment must be filed.
A complete copy of the Memo is attached for your convenience. If you should have any questions at all, please reach out to us.
Our team has had the pleasure of working with Starr Associates on our project at 150 Rivington Street. The entire Starr team was a tremendous asset to the success of our project. Through very challenging times, Starr Associates came through time and time again. It is an honor to work with everyone at Starr!
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It has been an absolute pleasure working with Allan Starr and Samantha Sheeber over the past twelve years. They are not only the utmost professionals, but also wonderful people who I have grown to love like family. I trust them with all of my new development projects and private clients, and we support each other in our business and personal lives. Starr Associates LLP has always been there for me and my clients and I would recommend them as highly as I recommend anyone.
Allan and I have worked together for decades; along the way, I have worked with Samantha Sheeber, Andrea Roschelle, John Rodriguez and Erica Starr and have always been pleased with their quick and accurate responses. They have worked with us on closings (with great and efficient results), restatements of stale plans, amendments and other assorted AG requirements, always on a timely and cost-effective basis.
“Working with Starr has been great on three condo projects in Manhattan to date. The accessibility and direct attention of the partners is unsurpassed. Allan and Sam have the interests of the owner at heart and make every effort to protect our interests in a responsible and defensible manner. Their practical approach and deep knowledge of the offering plan process and requirements of the AG office combine to make a highly effective and efficient package. At the associate level they have good support as well. The closing office has to be the best in NY – never a failed closing in 15 years. We are repeat customers and will be going forward.”
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“As an active developer in New York City, Magnum Real Estate Group is proud to have partnered with Starr Associates, LLP as our legal counsel in 5 significant projects valued at approximately $800 million. Over the last 5 years, Starr has provided us with exceptional advice on condominium Offering Plans and related transactions. Partner Samantha Sheeber, Esq. and her team have professionally guided us, and provided creative and effective solutions when needed.”
“I have had the fortunate opportunity, over the past 16 years, to work with Allan Starr and Samantha Sheeber who I consider to be experts in the field of real estate law. They, together with their team, have a deep understanding of Attorney General Offering Plan registrations and continually seek to identify creative solutions to complicated issues. Their level of integrity and commitment are unwavering no matter how large or small a project. I completely endorse Starr Associates LLP and look forward to our mutual continued success.”
“Starr Associates’ specialty in the creation and representation of condominiums is unmatched. Their knowledge, experience and professionalism in the office condominium sector is best-in-class. Starr Associates’ hard work and expertise has been critical to the success of our firm’s office condominium projects.”
“Starr Associates have been our condominium attorneys for many years. Their counsel goes well beyond just drafting the condominium documents, which of course they do extremely well. They also represent us and our brand with condominium unit purchasers, and with our lenders and partners on condominium related matters. We have always found Starr’s attorneys to be professional, responsive and cost-conscious.”